Rental rate of capital and marginal productivity of labor

Assignment Help Business Economics
Reference no: EM13860729

According to The Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan in an attempt to reverse declining global sales. Suppose that as part of the restructuring plan Mitsubishi conducts an analysis of how labor and capital are used in its production process. Prior to restructuring Mitsubishi’s marginal rate of technical substitution is 0.15 (in absolute value). To hire workers, suppose that Mitsubishi must pay the competitive hourly wage of ¥1,670. In the study of its production process and markets where capital is procured, suppose that Mitsubishi determines that its marginal productivity of capital is 0.6 small cars per hour at its new targeted level of output and that capital is procured in a highly competitive market. The same study indicates that the average selling price of Mitsubishi’s smallest car is ¥1,250,000. Determine the rate at which Mitsubishi can rent capital and the marginal productivity of labor at its new targeted level of output.

Find the following (to 4 decimal places).

Rental rate of Capital?

Marginal productivity of labor?

To minimize costs Mitsubishi should hire capital and labor until the marginal rate of technical substitution reaches what proportion?

Reference no: EM13860729

Questions Cloud

What was the airlines reaction to those events : Conduct an independent online search regarding the situation that arose with stranded JetBlue passengers on February 14, 2007. In a 1-2 page Word document, address the following prompts: Briefly summarize the events of that day. What was the airlin..
What is estimated explicit cost of your proposed business : You are thinking about becoming a Paradise Coffee franchisee. Franchisees are offered a business specializing in producing an exclusive line of exotic coffee drinks (similar to Starbucks). What is the estimated explicit (accounting) cost of your prop..
Bureau of economic analysis-change affect equilibrium : According to the Bureau of Economic Analysis, during the recession of 2007-2009 household saving as a fraction of disposable personal income increased from a low of just over 1 percent in the first quarter of 2008 to 5 percent in the second quarter o..
Briefly summarize the concept of online medical records : Briefly summarize the concept of online medical records. What advantages do patients have in adopting this system
Rental rate of capital and marginal productivity of labor : According to The Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan in an attempt to reverse declining global sales. Rental rate of Capital? Marginal productivity of labor? To minimize costs Mitsubishi should hire ca..
List the components of gross domestic product : Explain how each item affects you and the way that you live today
How disabilities are accommodated in that country : Choose a country other than the United States and Japan to research. Study how disabilities are accommodated in that country (e.g., is there an equivalent to the Americans with Disabilities Act, accommodations in school, accessible areas, etc.?
Marginal product of labor curves for production function : The production function at Ginko's Copy Shop is q = 1000 x min(L, 3K), where q is the number of copies per hour, L is the number of workers, and K is the number of copy machines. As an example, if L = 4 and K = 1, then the minimum of L and 3K, min(L,..
What are the effect of global competition : What are the effect of global competition on the decisions made by management

Reviews

Write a Review

 

Business Economics Questions & Answers

  Economic projections-enhance overall series of projections

You have just been appointed the new Economic Advisor to the U.S. Government and have been asked to develop an economic series of projections for the U.S. domestic economy for the next year. Outline your new forecast based on current developments. Al..

  Why is the production possibility frontier bowed outwards

Why is the production possibility frontier bowed outwards?

  About relative marginal products of nurses and robots

Suppose that hospitals use nurses (N), doctors (D) to perform surgeries (Q). The production function for surgeries is: Q = F(N;D), where F(N;D) is some function that increases in N and D. Assume that the marginal products of N and D are diminishing

  What would peso dollar exchange rate be if purchasing power

What would peso/dollar exchange rate be if purchasing power parity holds. If a monetary expansion caused all prices in Mexico to double.

  If the monopolist practices price discrimination

suppose a monopolist can separate its customers into two groups. If the monopolist practices price discrimination, it will charge the lower price to the group with: The XYZ Company is a profit-maximizing firm with a monopoly in the production of UIC ..

  How large must your annual deposit be

To help you reach a $5,000 goal five years from now, your father offers to give you $500 now. You plan to get a part-time job and make five additional deposits, one at the end of each year. (The first deposit is made at the end of the first year). If..

  What was the constant dollar percent increase in gdp

In 1988 the US gross domestic product (GDP) increased to $4.90 trillion at year end, from the 1987 year end level of 4.54 trillion in actual escalated dollar values. In the same year, the consumer price index rose approximately 4%. What was the const..

  Qdefine inflation assume that you live in a simple economy

q.define inflation. assume that you live in a simple economy in which only three goods are produced and traded fish

  The cognitive and non-cognitive skills

One economist has observed that by age 20, the cognitive and non-cognitive skills of people are set in such a way that those who are not good at learning new skills or concepts cannot be helped much by education or training programs. Assuming this ob..

  What should the government limit the number of auto

What should the government limit the number of auto and parts makers, the competition for would be limited. Please explain more on this subject.

  Theater increase its cost

Now Assume the theater increases the number of its ads to 250. Should the theater increase its cost following this ad campaign.

  Decade medical costs have increased more rapidly

Over the past decade medical costs have increased more rapidly than other prices. In order to illustrate how rising medical costs have affected consumer alternatives, let X represent the quantity of medical services, and let Y represent the quantity ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd